The Paperwork Pays: Why Government Contracting Is Worth The Effort
Like many other businesses in the construction and maintenance industry, Dave and Beth Kyle’s Trademasters Service Corp was struggling in 2008. The national recession was at its peak, and new construction had virtually stopped in the US. The Kyle’s understood that something had to be done. Employees were relying on them, and bills had to be paid.
Not known to rest on his laurels, Dave Kyle started research on a plan that would change his business forever. Kyle estimates that it took his plan 12-18 months to make his plan fully come to life.
Kyle figured that even if construction had slowed to a halt that one particular entity had to keep moving forward. They had to maintain existing buildings, and that would require the services of companies like Trademasters. That entity was the US Government.
Trademasters now employees what Kyle refers to as 135 “co-workers,” and many of them focus on the marketing required to successfully work with government contracts.
When Kyle speaks to workshops about working with government contracts there is always one thing that he starts with. He has everyone in attendance pick up a pen or pencil and write a nine and 10 zeros. Kyle wants attendees to see what 90 billion looks like on paper. He wants to put things in perspective for them before he explains that the US government has an annual budget of about $90 billion and that it is required by law to spend 23-percent (nearly $21 billion) of that budget with small businesses. He wants to show them that there is a great deal of opportunity to be had if they are willing to put in the effort. Kyle is clear that the “effort” that he teaches about is not easy but that it is entirely possible.
Kyle’s company started working with government contracts by first establishing a way to find available jobs to bid on. His team developed a database utilizing existing government databases to search for available jobs.
Building a unique exclusive database may not be something that every business has the staff or experience to do, but every business has free access to search government databases for available work.
To get started, Kyle recommends tracking open government contracts on sites such as USAspending.gov and FedBizOpps.gov. Market intelligence firms like ONVIA or ImmixGroup can also do the work for you. (ImmixGroup also has a useful blog that highlights upcoming opportunities as well as contracting tips).
While finding work is obviously important, it is just a small step in succeeding with government contracts.
Kyle likes to use the term “the paperwork pays” to point out the importance of properly completing government paperwork.
“The time that it takes to complete paperwork for a project can take as long or even longer than the project itself,” explained Kyle. “A business must figure in the cost associated with completing required paperwork in their bids to be sure that they honor their bid without losing money. Some businesses will try to pad the price of a job with change orders to makeup for factors they failed to factor into their bids, but that is not smart because approval of change orders is not guaranteed.”
“There are a number of factors that a business must understand and put into place to be successful with government work,” explained Kyle. “The real key is making the government’s system your system.”
Kyle recommends that every business interested in working with the government first study and understand the Federal Acquisition Regulation (FAR). FAR lists government policies that must be followed.
Kyle further explained that understanding how the government operates is a critical starting point based on the fact that virtually every government agency and branch of the military has a different system of rules, regulations, and requirements in place that must be fully understood. For example, a local post office will have a completely different system in place than the Navy does.
Each agency also has an amount that they must budget to spend with small businesses.
According to the Small Business Administration, the government offers potential contractors something that no other sector does — an insight into its budgetary priorities. What the government intends to buy, and how much it has to spend is all in the public domain. These budgets offer sufficient context for small businesses to identify opportunities and focus their contracting sales and marketing strategy. Each federal agency or department budget is listed on the Office of Management and Budget (OMB) website at www.whitehouse.gov/omb/budget/Overview/.
In addition to the required resources needed to properly complete paperwork and understand government budgeting, there are other things that a business must have in place to successfully work with the government.
One of the most important is a way to get paid. The government has virtually eliminated the use of checks in favor of electronic fund transfers (EFT). Any business looking to work with government contracts should have EFT setup on their business bank account, and they should also be able to accept the government’s official credit card.
Each contractor must also have a D-U-N-S Number, a unique nine-digit identification number, for each physical location of their business. D-U-N-S Number assignment is free for all businesses and is required to register with the US Federal government for contracts or grants. A D-U-N-S Number can be requested at fedgov.dnb.com/webform/pages/CCRSearch.jsp.
An understanding of The North American Industry Classification System (NAICS) is also important. This is the standard used by Federal statistical agencies in classifying business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the US business economy. Every industry is listed within NAICS.
Businesses seeking government work must also understand that the government has a rating system in place to measure the quality of completed work. Ratings that your company is given are available to other government agencies and can impact whether or not you win a contract. A business can also benefit from positive government ratings by sharing them with non-government prospective clients. A positive review from the government can go a long way in helping a business establish trust. Like any other job, performance is important and some businesses will hire contractors based on performance and not just based on the amount of their bid.
Kyle notes from the start of his seminars that it is important for a business not to try jump in too deep or too fast when working with government contracts.
“A business that is small can stay small, and not put themselves at risk by accepting contracts they cannot finish or afford to work on,” explained Kyle. “Working with government contracts is a great way to even out peaks and valleys in your bottom line, but it’s not hard to get in trouble. Research and understanding are very important.”
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